Trade unionsDiscuss the extent to which the relative strength of trade unions influence the level of earnings in different occupati
Labor unions are a bargaining tool for workers. Firms that do not allow the formation of unions do not want to deal with work coming to a stop if a large group of workers were to go on a strike. Workers are usually fine with this more because they have a limited number of options. It isn't true that the existence of unions would lead to reduced profits or losses. After all, the workers are aware that a loss making firm would simply shut down and they would be out of work.
This will differ in different economies. In post-industrial economies like the US, the highest wages are paid in sectors that are not unionized. Workers in these sectors don't need unions because their skills are in high demand. Overall, though, unions tend to raise earnings in sectors where they are strong, at least in the short term. Long term, though, globalization seems to ensure that unions cannot keep wages high in any competitive sector of an economy.